To buy and sell cryptocurrency like Bitcoin (BTC), using a crypto exchange is often best, as mining for these digital assets can be very expensive, not to mention time-consuming. However, like cryptocurrencies, the number of exchanges around is eye-watering. As a result, beginners and even experts may find the choice overwhelming.
To cut through the wealth of choices, there are several key characteristics to keep an eye out for, just like a trading platform for traditional assets.
Why do I need a crypto exchange?
Before delving in-depth into what makes a good crypto exchange, let's first go over why you need one. It may sound obvious, but you must ensure they do more than allow you to trade crypto assets with large market caps like Ethereum (ETH). They also need to provide the liquidity you need to trade so, irrespective of circulating supply, you can buy and sell any other cryptos easily. That needs to be the case whether you are purchasing the stablecoin Tether (USDT) for some USD or whether you are buying a new coin that has recently had an initial coin offering (ICO).
Therefore, the crucial factor to remember when understanding why you need an exchange is that your provider must support and facilitate your trades. You need the ability to take a position in crypto easily while just as easily being able to exit it - regardless of market cap.
Characteristics of a good crypto exchange
We’ve identified five crucial characteristics to seek in any exchange. However, what you want specifically from a platform can be subjective, so you may not believe it's necessary to have all of the below. Instead, consider these characteristics in relation to what you want from your crypto investments, how you like to trade specifically, and how that tallies up with the rest of your portfolio.
A characteristic that most people will want from a platform is for it to have low fees across the board.
However, there is a balance here.
A company needs to offer low fees while still providing a good user experience which delivers on its crypto trading provision. If the fees mean that the technology backing its platform is poor, it may cause you to trade in a suboptimal fashion - costing you money in the long run. So, while you may want to keep fees as low as possible, you may find the service offered by some platforms is so good it does not matter that their fees aren't the lowest offered by competitors.
Trustworthy with robust security features
In the wake of the alleged FTX fraud and increased cybercrime in general, you want to ensure that your platform is safe to use. Staying safe while trading on an online platform is a multi-faceted affair - from your login (be it two-factor authentication or otherwise) to how you transfer your money in and out. Be sure to investigate this before signing up to a platform and depositing money. Specific to crypto exchanges, you may want to discover what their storage facility is like for your currencies and if they are regulated or registered with a relevant body.
Knowledge through social trading
Increasingly users want the ability to copy crypto strategies on a trading platform. That's especially the case for cryptocurrencies, with many individuals still trying to figure out how to use the asset type to diversify their portfolio. Social trading allows users to quickly follow a trader. They can then implement that trader's strategy, taking advantage of their experience and knowledge without having ever traded cryptos before in their life. Despite having zero trading volume in their history, social trading can mean users outperform the market if they choose the right trader to copy.
Simplicity with user-friendly interfaces
If you're a novice to crypto trading, the exchange you choose must be user-friendly. But that's still the case if you are an expert. While beginners undoubtedly need support in making the process as easy as possible, experts need technology to enable their complicated trading strategies without impeding their activity. In addition, the crypto market is volatile, so it's crucial you can time your exit and entry positions at the point you want to - if your exchange prevents you from doing that effectively, you may see a significant negative impact on your ability to make returns.
Another crucial characteristic for novices and experts alike is that their chosen exchange offers them an efficient way to trade. That means real-time pricing, where price changes are quickly displayed so that traders have the information they need at the time they need it. Exchange efficiency also makes placing trades easier, but it needs to go beyond that. Making deposits, exchanging assets into traditional currencies, or simply paying fees must be quick and painless.
ICONOMI delivers all these features to make your crypto journey easy
Cryptocurrency exchanges pop up all the time. However, we’ve identified ICONOMI as one worth considering and features all the characteristics we list above.
ICONOMI is not a traditional exchange - it's a copy trading platform - that could be an excellent option for you, particularly if you are interested in social trading. The company allows you to create your own strategy for investment or copy a strategy managed by an experienced trader.
It means you can easily diversify your crypto holdings by using other users' knowledge to implement strategies. That's further helped by the company's platform, which has been designed with simplicity in mind. It’s exceptionally beginner-friendly, making timing your trades even easier. Plus, it comes with the bonus of being an FCA-registered platform, providing you with security and peace of mind.
The price of trading and investing with ICONOMI is competitive, while the company also offers you plenty of confidence and knowledge through its blog and copy trading capabilities.